CLP Beacon - Business Issues and Solutions

Thursday, January 21, 2016

Leveraging the Apple Ecosystem with Third Party Hardware Products

There are many things that make a successful company: great
leadership, exemplary people, a solid culture, and a much targeted market. Yet, people sometimes overlook the impact of
building a successful ecosystem of partners who can help a company with new
applications, products, features, and channels to the market.

So we decided to look at one of the masters of building such
an ecosystem: Apple. We all know how
successful Apple has been with the iPhone and the iPad and creating new product
categories and platforms that leverage mobile computing.
Mobile accessory vendors have been quick to leverage Apple's product platform
from the very beginning. In building lifetime value of a customer, these
accessories can derive large profit margins for everyone in the value chain. Just
how big is the market?

For the sake of discussion, we can look at mobile phone
accessories as part of larger wearables and mobile accessories market. In fact,
if you use mobile phones as controllers, they start to tap into the concept of the
Internet of Things
(IoT) and other related and adjacent markets in smart homes, entertainment, and
security.

Let’s look at mobile phone accessories. Future Market
Insights subdivided this market into more than 6 categories as shown below and
included their 2014 market share.

While this list is pretty straightforward, strangely, I
believe it is missing one important category - hardware enabled input and
output devices that take advantage of the iPhone platform as a controlling
device. This is a distinct advantage of the iOS market. Unlike Android devices,
whose styles, hardware, form factors, buttons, switches vary by competitor, the
iPhone platform and ecosystem is standardized to allow a clear path to hardware
development of the iPhone mobile computing platform. They offer developer
programs like MFi and
the External
Accessories Framework (EA) to support communication and support of third
party hardware device to an iOS device through Apple Lightening, 30-pin
connector and wirelessly using Bluetooth.

In the presentation by VisionMobile,
these ecosystems have given birth not only to red and blue oceans, but black
oceans, ecosystem driven-markets that are so powerful and strong, you can't
beat them, and you can only join them or compete with them with another black
ocean ecosystem (e.g. Android vs. iOS).

A simplified input-output model for hardware development looks
something like this:

In the imaging, test and measurement, and audio markets,
companies are leveraging Apple's ecosystem in some exciting and new ways, often
creating new product categories or products that are substitutes to existing
products that were created on platforms and devices in the pre-smart, mobile phone
world.

Echo Labs Revolve -
a San Diego startup that is developing an innovative microscope that use mobile
phones and tablets for image viewing, image capture, analysis and printing.

HyperCam
- under development, the HyperCam makes use of a technology called
hyperspectral imaging, which involves scanning 17 wavelengths of visible and
invisible near-infrared light from across the electromagnetic spectrum to
capture unseen details.

eora 3D - the world’s first
high-precision 3D scanner that is entirely powered by a modern smartphone. It
lets you capture everyday physical objects and surfaces and turns them into
high-quality 3D models, all on your phone, making it extremely affordable.

Range
Smart Cooking Thermometer - hardware and app to receive remote temperature alerts to
iOS devices anywhere. You can also save
and share recipe graphs, and set both USDA- and gourmet-recommended presets, so
you know your dinner will be done just how you like it.

There are also brainwave measurement using devices like Emotiv's
EPOC / EPOC+. Another popular one is
by Muse.

A list of other medical-device accessories for the iPhone
can be found here.

Audio & Music

Alesis IOMIX 4-Channel Audio Interface/Mixer for iPad -
enables four-channel mixing and
recording on your iPad. The iO MIX provides all of the necessary connections,
as well as compact four-channel mixer for making the most of every performance.
With its compact design, iO Mix is the perfect portable studio.

Focusrite
iTrack Professional Dock for recording on iPad. iTrack Dock is a
comprehensive, studio-quality iPad recording interface that acts as the hub of
your iPad recording studio. It features dual legendary Focusrite microphone
preamps, along with two line inputs and an instrument DI with plenty of extra
headroom, stereo monitor outputs with 105dB dynamic range plus independently
controlled headphone outputs, and a USB port for class compliant MIDI
instruments and controllers.

DigiTech
IPB10 Guitar Floor Multi-Effects Pedal - a programmable Pedal board which sets a new
standard for guitar signal processing. By harnessing the power of the iPad, it
combines the simplicity of a pedal board with the flexibility of multi-effects.
The iPB-10 unleashes the ability to create and control guitar effects like
never before. The iPB-10 allows you to create your ultimate pedal board, all on
your iPad. Design a pedal board by simply dragging and dropping up to 10
different pedals, in any order, to each pedal board.

IK Multimedia iRig 2, an interface
adapter for iPhone, iPod touch, iPad, Mac and Android. They have an entire line
of mics, mixers, effects, and recording attachments for smartphones and tablets.

Where do you go from here?

There are many other examples and opportunities are limited
only by the capabilities and functionality of the iOS platform.

The key point is that a company, such as
Apple, looks at their product as a platform upon which others can build and
profit from. In addition, other
companies can exploit that ecosystem to build their business.

There are a many hardware opportunities for innovative companies
that can do one of two things to leverage the capabilities of Apple platform.

1) Replace existing products by harnessing the power of the
Apple ecosystem. Create disruptive products that challenge and change
prevailing value propositions and pricing of these products in the market. Leverage existing value chains to drive
market share and expand the market.

2) Create new products and solutions that were too costly or
unattainable, until the iPhone ecosystem was developed. Develop the market with
new price/performance curves and blue ocean ideas that bring radically new
capabilities and functionality that might have been confined to a higher priced
niche.

While this blog focuses on Apple, other companies may glean
ideas on how they can transform their products and services by leveraging the
power of an ecosystem. Sometimes, it
is just a matter of building a stronger business development function. Other times, it may be reviewing and
expanding on the product set which will make the product or platform more
robust. Perhaps setting up a new product
or business advisory panel can help with those ideas.

What are your thoughts on this topic? Let’s continue the dialog. And if you would
like to discuss building an ecosystem, feel free to contact me at vferraro@clevelpartners.net or
tweet me @vincelferraro and
check out our other insightful blogs and resources.